It’s not unusual, but it’s kind of a big deal for a corporation as large as Oracle to be doing it because it means they’re hiding tens if not hundreds of billions from showing up on the bad side of their account charts.
So they’ve got negative cash flow so that they could show epic growth, but the growth itself is hella juiced because the GPUs are only relevant for about 3 years till the new ones are out and make more AI for less power. And they depreciate them over 7 years. More than twice as long as they can or should use the GPUs for.
the growth itself is hella juiced because the GPUs are only relevant for about 3 years till the new ones are out and make more AI for less power. And they depreciate them over 7 years. More than twice as long as they can or should use the GPUs for.
We don’t actually know this for sure, yet. I had expected the A100 generation (released in 2020) to no longer be profitable to run by now, but the backlog in new data centers being turned on and the high demand from Anthropic and OpenAI still leaves those chips useful for inference. You can rent those 2020 chips out today at some price above what they cost to continue running (300W, so electricity prices of USD $0.20 per kWh would translate into about 6 cents per hour. Prevailing spot prices appear to be about $2/hour right now.
But just because I was wrong on 2020 chips, originally sold for about $15,000 in a low interest rate environment, doesn’t mean that I’m wrong about 2024 chips, the B100s that use 1000W and were sold for $35,000, requiring a ton more specialized cooling, power, and network infrastructure. Or the 2026 R100s that use 2000W, and whose prices I can’t seem to find published anywhere, but were set after the memory companies basically locked in their record breaking prices for their HBM. That’s an unsustainable path and at some point, data centers start struggling to find users willing to pay the bare minimum necessary to continue turning a profit on GPU usage.
I doubt the 2024 chips stay in service to 2031. And I’m really, really skeptical that the 2026 chips stay in service to 2033, especially after NVIDIA switches to yearly release cycles next year.
It’s not unusual, but it’s kind of a big deal for a corporation as large as Oracle to be doing it because it means they’re hiding tens if not hundreds of billions from showing up on the bad side of their account charts.
So they’ve got negative cash flow so that they could show epic growth, but the growth itself is hella juiced because the GPUs are only relevant for about 3 years till the new ones are out and make more AI for less power. And they depreciate them over 7 years. More than twice as long as they can or should use the GPUs for.
We don’t actually know this for sure, yet. I had expected the A100 generation (released in 2020) to no longer be profitable to run by now, but the backlog in new data centers being turned on and the high demand from Anthropic and OpenAI still leaves those chips useful for inference. You can rent those 2020 chips out today at some price above what they cost to continue running (300W, so electricity prices of USD $0.20 per kWh would translate into about 6 cents per hour. Prevailing spot prices appear to be about $2/hour right now.
But just because I was wrong on 2020 chips, originally sold for about $15,000 in a low interest rate environment, doesn’t mean that I’m wrong about 2024 chips, the B100s that use 1000W and were sold for $35,000, requiring a ton more specialized cooling, power, and network infrastructure. Or the 2026 R100s that use 2000W, and whose prices I can’t seem to find published anywhere, but were set after the memory companies basically locked in their record breaking prices for their HBM. That’s an unsustainable path and at some point, data centers start struggling to find users willing to pay the bare minimum necessary to continue turning a profit on GPU usage.
I doubt the 2024 chips stay in service to 2031. And I’m really, really skeptical that the 2026 chips stay in service to 2033, especially after NVIDIA switches to yearly release cycles next year.